Netflix At Critical Resistance Level
NFLX had formed a major area of resistance around the $385 level (green) during the past two years. However, the stock broke through that resistance yesterday. If NFLX comes back down to that $385 level, which should now act as support, a bounce could be expected.
Netflix, Inc. is an Internet subscription service company, which provides subscription service streaming movies and television episodes over the Internet and sending DVDs by mail. It operates through the following segments: Domestic Streaming, International Streaming and Domestic DVD.
Take a look at the 1-year chart Netflix (NASDAQ: NFLX) below with my added notations:
NFLX had formed a major area of resistance around the $385 level (green) during the past two years. However, the stock broke through that resistance yesterday. If NFLX comes back down to that $385 level, which should now act as support, a bounce could be expected.
The Tale of the Tape: NFLX broke through its key level of resistance at $385. A long trade could be entered on a pull back down to that level. However, a break back below $385 could negate the forecast for a higher move and would be an opportunity to get short the stock.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
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No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Good luck!
Christian Tharp, CMT
Good luck!
Christian Tharp, CMT
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